Certified International Property Specialist

Countries around the world strive to lure global capital onto their shores using a
variety of sophisticated techniques. Those countries with high standards of living and
an abundance of opportunity are natural draws for immigrants. The right of residency is
something that can be leveraged to attract even more investment capital. In fact, many
wealthy individuals are willing to invest sizable funds to qualify for residency and the
right to enter and leave at will.
Many nations have structured visa programs to attract capital for targeted economic
growth. The United States uses its EB-5 investment visa to fund projects that create
American jobs. A similar program in Canada drives money to the provincial and
territory level for local use. Other countries use funds generated by investment visas to
infuse their financial sectors with additional capital.
This issue of Global Perspectives takes a spin around the world looking at investment
visas, initially examining the U.S.’s EB-5 and various issues that have arisen since our
last reporting on the program in April 2011.
You’ll also learn about similar initiatives in Canada, the United Kingdom and Australia.
Each program uses different levers to attract specific types of capital, investment
and entrepreneurial skills—and each is designed to benefit various aspects of a
country’s economy.
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Certified International Property Specialist
2 ~ Global Perspectives 02.2014
The EB-5 visa program benefits both applicants
and the marketplace:
• Investors receive conditional green cards for themselves,
their spouse, and any children under the age of 21.
• U.S. developers gain access to low-cost
international capital.
• Economically depressed Targeted Employment Areas
(TEAs) get jobs.
• Real estate agents may also benefit because EB-5 visa
holders must establish a U.S. residence, and therefore may
become prospective home purchasers.
Launched in 1990 by the U.S. Citizenship and Immigration Service (USCIS), the EB-5
visa program helps the U.S. compete for international capital against other countries
that offer similar programs. It is designed to attract foreign investment in projects
that create jobs for U.S. citizens.
Applicants must commit $500,000 to $1,000,000 to a new business or project
that will create at least ten jobs over a specified time period and submit a detailed
business plan to be approved by the USCIS. Upon approval of the application
process, an investor receives conditional U.S. residency. Permanent residency can be
granted after a 2-year conditional period if the employment objectives are fulfilled.
There are two main types of EB-5 visas. The
Individual EB-5 requires direct investment in
any for-profit of business that creates at least
10 full-time jobs for U.S. workers. The Regional
Center EB-5 visa requires investment in USCIS-
approved regional centers creating at least 10
direct, indirect or induced jobs per investor. The
investor is usually a limited partner or member
of an LLC and is free to live anywhere in the
United States, and can work or not work as the
investor wishes. (See the April 2011 issue
of Global Perspectives or the USCIS website
uscis.gov for more information.)
Recent Adjustments
Several steps have helped the EB-5 program
manage its growth pains. In September 2012,
President Obama renewed the program for a
three-year period, eliminating some degree of
hesitancy among potential investors with what
had previously been termed a “pilot program.”
The USCIS has also reorganized its EB-5
processing unit to help it deal with a surge in
applications during the recession. To tackle its
processing backlog, an additional EB-5 unit was
hired in Washington, D.C. and more personnel
were added, which hopefully will improve wait
times for approval or denial of I-526, the initial
EB-5 petition.
Some of the most significant changes in the EB-5
arena resulted from a memorandum issued by
the USCIS in May 2013. It clarified the USCIS’
position on key issues that were causing delays
and inconsistencies, and which were most
likely to result in denials.
Certified International Property Specialist
02.2014 Global Perspectives ~ 3
(continued on page 4.)
Association to Invest in the USA
For EB-5 advocacy news
Lucid Professional Writing
Updates to Regional Center list,
news and statistics
GreenbergTraurig EB-5 Insights
Klasko Immigration and
Nationality Law
Articles by prominent
EB-5 law firms
Clarifications and policy changes included
the following:
• EB-5 funding may be used to replace initial
bridge funding in Regional Center projects.
This means that an investor can join a project
after it has moved beyond its speculative pre-
construction stage, reducing financial risk and
the risk of the project failing to meet USCIS
• The USCIS recognized the “fund model” so
that an investment in a single Regional Center
enterprise can fund a portfolio of approved
projects, reducing investor risk.
• The USCIS no longer requires an investor
to restart the entire application process if
the business plan materially changes after
conditional residency has been approved, but
before permanent residency is granted.

EB-5 Market Matures
In recent years the number of EB-5 visas issued
has more than doubled, from 3,463 in FY 2011 to
7,641 in FY 2012. The increase has been driven
by investors from mainland China, who make up
more than 80 percent of EB-5 investors. Earlier
this year EB-5 professionals feared the program
would reach its limit of 10,000 visas per year for
the first time in 2013. That did not happen, but
the risk that it could raised new questions and
The market has also evolved in terms of the
types of projects that utilize EB-5 funding. In
the mid-2000s many EB-5 projects were run
by small developers who were crowded out of
the credit market. The EB-5 program gave them
access to low-cost capital they couldn’t find
elsewhere. For example, Jay Peak, a ski resort in
northern Vermont, used foreign funding in 2008
to expand its ski facilities.
Since then very large developers have begun
utilizing the EB-5 program. Major hotel
developers like Marriott, Hilton, Hyatt and
Starwood have tapped it for large projects
throughout the country. Hotels are a particularly
good fit to the programs because they generate
so many jobs. Now smaller EB-5 projects find it
hard to compete for EB-5 investors against large
ones which have a lower risk of non-completion.
Fraud and the SEC
In October 2012, the USCIS announced
plans to work with the Securities Exchange
Commission (SEC) in identifying and
prosecuting fraud in EB-5 Regional Centers.
Regional Center projects must now issue Private
Placement Memos (PPMs) that follow strict SEC
securities guidelines. The SEC charged two EB-5
projects with securities fraud in 2013.
In SEC v. Marco A. Ramirez, et al., the USA Now
Regional Center is alleged to have solicited
investors prior to receiving its Regional Center
designation. Its PPM promised investors a five
percent return. Further, funds that the owners
should have escrowed were put to personal
use. Investors received no visas from their
investment in the USA Now Regional Center.
In the high profile SEC v. A Chicago Convention
Center, et al., the SEC halted a project that had
brought in $156 million in overseas funds. The
developer is alleged to have falsely promoted
the project as the “World’s First Zero Carbon
Emission Platinum LEED-certified” hotel and
conference center in Chicago, and to have
falsely claimed that all necessary building
permits had been acquired and that it had the
backing of major hotel chains including Hyatt
and Starwood.
“This case received widespread media
attention in China,” reports Adel Elmankabady,
ALC and Principal of Georgia Center for
Foreign Investment and Development in
Suwanee, Georgia. “It left a bad taste in the
mouths of Asian investors. They have become
more cautious.”
Both cases underline the need for investors to
do due diligence, and to work with experienced,
well respected professionals. An Investor Alert
released jointly by the SEC and USCIS states
that “the fact that a business is designated as
a regional center by USCIS does not mean that
USCIS, the SEC, or any other government agency
has approved the investments offered by the
business, or has otherwise expressed a view on
the quality of the investment.”
Certified International Property Specialist
4 ~ Global Perspectives 02.2014
WHAT’S NEW WITH EB-5? (continued from page 3.)
Discovery Times Square is a new
large-scale exhibition and experiential
museum that used EB-5 funding during
construction. As an official Discovery
Channel promotional partner, its
exhibitions include King Tut, Harry Potter
and Titanic artifacts. DTS opened in 2013
and is the fifth most visited museum in
New York City. It has generated over 590
new jobs.
The Marriott Corporation has used
EB-5 funding for 14 of its recent hotel
developments. Underway is a new
377-room hotel located near the
Staples Center in Los Angeles expected
to open in 2016. American Life Inc., a
commercial property development and
management company, worked with
Marriott in the procurement of EB-5
funding for this and other projects.
This one is expected to generate over
4,200 direct and indirect jobs in and
around the hotel when completed.
The Florida Restaurant Franchise
Group (FRFG) has tapped EB-5 funding
for restaurant development. Three
of its brands, Five Guys Burgers,
VooDoo BBQ & Grill, and Twin Peaks
Restaurant, are expanding in the Palm
Beach Regional Center. With several
EB-5 projects complete, FRFG is now
in its eighth EB-5 offering and has
generated over double the number
of jobs required by the USCIS.
Implications for Global Real
Estate Agents
The EB-5 visa may be a good fit for
those who seek entry to the U.S. and the
opportunity to buy residential property,
including individuals, couples and
families who prefer to live and school
their children in the U.S.; foreign nationals
on long waiting lists for other visas;
entrepreneurs who want to start a U.S.
business; and affluent buyers who want a
second home in the U.S. and
more flexibility to use it.
If you have prospects who fit these
descriptions, consider learning more
about EB-5 visas (see sidebar on page
three for resources) and expanding your
professional contacts so that you are able
to discuss the program with knowledge
and refer your clients to experts who can
advise them on next steps.
Identifying EB-5 Professionals
Applying for the EB-5 visa is a
complicated process requiring an
extraordinary amount of paperwork
as well as due diligence on the project.
The applicant needs experienced
advisors with strong backgrounds in
EB-5 projects to navigate the process,
including immigration attorneys
specializing in EB-5 law. They can
explain more about the process and
current waiting times (timing may be
critical to your buyer’s plans).
Immigration attorneys with EB-5
experience do not have to be local. In
fact, they probably won’t be. Go to the
websites for the American Immigration
Lawyers Association (aila.org) and
the Alliance of Business Immigration
Attorneys (abil.com) and contact
their EB-5 committees. Websites for
experienced EB-5 attorneys should
contain information on their specialists,
publications and seminars.
Beyond the Investment
In some cases persons pursuing an EB-5
visa may be willing to make such an
investment as a vehicle to achieve
residency. Returns on EB-5 funding are
very low compared to other investment
products. The main goal is residency,
which is only granted unconditionally if
the EB-5 project fulfills its job creation
requirements. Successful project
execution is of the utmost importance.
Urge your client to hire advisors to do due
diligence and to examine the soundness
of the developer’s business plan.
If overseas investors are looking for
higher returns, they may also be able to
invest in the non-EB-5 funded part of the
project. “I had a client who wanted to
invest more than $500,000 which was
earning one percent as EB-5 money,”
recalls Elmankabady. “The developer
let her invest an additional $2,000,000
in the general fund which returned
12 percent.”
The EB-5 visa program is a great way
to help affluent overseas buyers obtain
residency and spend more time in their
U.S. properties. Be prepared to suggest
it where it fits, but avoid presenting
yourself as an investment advisor.
Caution your clients that you are not
recommending any particular program
and urge them to discuss the EB-5 with
their attorneys and investment advisors
prior to making any decisions. If you
point the way to a successful transaction,
these new residents will very likely tell
their friends, creating opportunities for
additional referral business.
Certified International Property Specialist
02.2014 Global Perspectives ~ 5
(continued on page 6.)
Investment visas have become powerful tools for countries trying to attract overseas
capital. These programs infuse significant sums of money into economies, support the
residential and commercial real estate markets, create jobs for citizens and in some
cases direct foreign capital to very specific economic sectors.
Investment and entrepreneur visas are structured to target:
• high net worth individuals,
• entrepreneurs who want to run their own businesses and have
the resources and business experience to do so, and
• small but viable startup businesses that will grow into viable industries.
Many industrialized countries use permanent residency as a “carrot” to attract
investors to their shores. Following is a summary of programs in four countries,
each of which competes with the U.S. EB-5 visa.
Prior to 2012, Canada’s Immigrant
Investor Program (IIP) was among
the least expensive and most popular
investor visas in the world. The
Citizenship and Immigration Canada
(CIC) department became so flooded
with applicants that it doubled the
IIP’s investment threshold. In July of
2012 the CIC stopped accepting new
applications due to a reported backlog of
85,000 applicants (investors and family
members). Processing times are currently
estimated at eight years.
Though the program is on hold, the
government is looking at modifications.
As it now stands, applicants must have
a net worth of at least C$1.6 million
and be able to invest C$800,000 in
the Canadian government for five years
(returnable at the end of the term
with no interest) or to make a non-
refundable payment to the government
of C$120,000. The program also looks at
the applicant’s educational background,
business experience and language
proficiency. The Canadian government
controls how funds are used, directing
them towards job-creating projects at the
provincial and territorial level.
Canada’s latest tool for attracting
wealthy foreign nationals is the StartUp
Visa Program targeting entrepreneurs
actively engaged in the new economy.
Applicants must obtain minimum funding
of C$75,000 from angel investors and
C$200,000 of venture capital. The
program hopes to attract new software
companies that have made it past the
incubator stage. Canada sent a delegation
of angel investors and entrepreneurs
to South Africa in November 2013 to
actively recruit startups.
The United Kingdom’s Tier 1 Investment
Visa is aimed at wealthy foreign nationals
who want permanent residency in the
U.K. It offers three investment levels; the
more the applicant invests, the faster
they (and their spouse and children under
age 18) are granted permanent residency:
£10M qualifies an investor for permanent
residency after two years and for
citizenship after five years;
£5M for permanent residency after three
years and citizenship after five years; and
£1M for permanent residency after five
years and citizenship after six years.
Certified International Property Specialist
6 ~ Global Perspectives 02.2014
At least 75 percent of the funds must be
invested in U.K. government bonds, share
capital, or loan capital for active and trading
companies registered in the United Kingdom.
The rest can be used to purchase U.K. real
estate or be deposited in a U.K. bank.
The Investment Visa has no language
requirements, however the visa holder must
spend more than 185 days per year in the
United Kingdom. He or she does not have to be
employed, but can find employment if desired.
Processing time is currently under six months.
The Tier 1 Entrepreneur Visa is aimed at foreign
nationals who want to start and run a business.
The applicant must have £200,000 in liquid
assets in a U.K. financial institution or £50,000
in capital from a U.K. funding source (venture
capital, seed fund or government department
charged with economic development). To
secure the visa, applicants must score sufficient
points based on funds available to invest (plus
additional funds to cover living costs in the U.K.)
and English language proficiency. Temporary
residency is given for three years at which time
evidence of job creation must be provided. An
individual who creates over ten jobs or shows
£5M in annual sales may apply for citizenship
after five years.
The Australian 888 Significant Investment
Visa was introduced in November 2012. It
targets high net worth individuals who are
willing to invest at least AUS$5 million in
complying investments for a four-year period.
In its first year, 65 applications were approved
generating more than AUS$325 million. The
total investment represented by applications
applied for in the first year, but not necessarily
approved, is around AUS$850 million.
Though the visa is intended for any wealthy
foreign nationals, its name was chosen with
Chinese investors in mind. (In China, the
number 888 is associated with wealth.)
Currently, processing time is around nine
The program does not require job creation.
Instead its goal is to infuse capital into
Australian companies and the economy, which
in turn will stimulate job creation. An accepted
investor who spends at least 160 days in
Australia and maintains his investment over
four years is eligible to apply for a permanent
resident visa.
The Australian government recently broadened
its eligible investment options to include
certain annuity, derivative and mortgage-
backed securities and bonds, equity and other
Australian corporate debt. Though investments
are not guaranteed, there is the opportunity to
make a generous return depending on which
way the economic winds blow.
Australia also offers Business Innovation and
Investment Subclass 188 visas for investors and
business owners who wish to establish business
operations in Australia. Applicants must be
nominated by state or territorial government,
are selected based on their skill set and must
pass a points test based on business ownership
experience and net assets.
In October 2012, Portugal launched its Golden
Visa Program as a fast track for non-European
Union citizens to obtain a five-year residency
permit. It became extremely popular very
quickly because of its flexible investment
requirements and the freedom it gives to travel
throughout most of Europe.
There are three ways to qualify. The least
expensive is to invest in property in Portugal
worth at least €500,000 and maintain the
investment throughout the term of the visa.
Another option is to invest at least €1,000,000
in any Portuguese business or deposit the
same into a Portuguese bank account. Finally,
any level of investment creating at least ten
permanent jobs meets requirements.
The visa is issued initially for one year and then
renewed for successive two-year periods. The
visa holder must spend at least seven days in
Portugal in the first year, then 14 days during
(continued from page 5.)
Certified International Property Specialist
02.2014 Global Perspectives ~ 7
each of the following two-year periods for a
total of 35 days. They also must maintain their
original investment in Portugal for the term of
the visa.
The Golden Visa gives the holder and their
immediate family the right to reside in Portugal
and the freedom to travel in the Schengen area,
which covers 26 European countries but not
the United Kingdom. It also allows children of
visa holders to study in European Schengen
countries. In the first year the visa was available,
356 permits were issued bringing €222 million
in new investments to Portugal.
Who applies?
As many as 80 percent of applicants to these
countries’ investment visa programs are
Chinese citizens seeking to emigrate with their
families. China now has more than a million
millionaires (assets under management in U.S.
dollars) and a growing number of ultra high net
worth households. Wealthy individuals from
Russia, United Arab Emirates, Brazil and South
Africa are the next largest groups applying for
investment visas around the world.
Factors to Weigh
Affluent investors look at a great many variables
in choosing where to apply. The level of
financial investment is just one consideration
and may not be terribly important for someone
who has the resources to clear even the highest
hurdles. Processing times are important to
many investors and they vary greatly among
countries. The number of days per year an
investor is required to live in the country can be
critical to an applicant’s decision.
There is also the issue of return on capital.
Some programs guarantee to refund the original
investment after a fixed number of years. The
U.S. EB-5 does not make guarantees but instead
requires the investor to bear at least some
financial risk as well risk of failure to create
enough jobs for permanent residency approval.
The U.K. and Australia investments are open to
market risks, with no guaranteed return.
Countries around the world are using visa
programs to grab a bigger piece of the
international investment pie. There are lots of
twists and turns for investors looking for the
right fit. Familiarizing yourself with the global
competition helps you understand the factors
real estate investors are considering and related
implications for property searches.
U.S. Canada* U.K. Australia Portugal
EB-5 Visa Immigrant
Tier 1
888 Significant
Golden Visa
$500,000 or
C$800,000 £1 million,
£5 million, or
£10 million
AUS$5 million €500,000 (in
property) or
€1 million
(in cash
investments) or
any amount that
creates at least
10 jobs
Invested in U.S. business-
creating jobs
75% in U.K.
companies or
bonds (re-
mainder can
be U.K. prop-
erty or bank
company debt
and equity
or cash
in a Portuguese
business or
bank account
Visa status 2-year
green card,
green card
after 3 years
after 2 to
5 years
residency after
4 years
residency after
5 years
* Program currently closed to new applicants.
Certified International Property Specialist
430 North Michigan Avenue • Chicago, IL 60611-4087
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